Senate panel advances gas line aid

Posted: Thursday, April 10, 2003

By H. JOSEF HEBERTAssociated Press Writer

WASHINGTON (AP) -- Lawmakers in the Senate Energy and Natural Resources Committee have agreed to $18 billion in federal loan guarantees for developers of a proposed pipeline from the North Slope to the Lower 48.

The measure approved Wednesday as part of an energy package stipulates that the pipeline would have to run southward through Alaska and Canada, and not over a northern route where it would pass under the Beaufort Sea before turning south in Canada, essentially bypassing Alaska.

According to Alaska Sen. Lisa Murkowski, pipeline developers would also be allowed to depreciate sections of the line over seven years instead of the normal 15, reducing their taxes in the early years.

Another amendment would encourage federal officials to help construction of a separate natural gas pipeline down the Mackenzie River valley in Canada, according to Murkowski, a Republican.

Other work on a proposed energy bill would expand the use of corn-based ethanol as a gasoline additive. That measure advanced out of another Senate committee Wednesday.

The ethanol bill would phase out the controversial gasoline additive MTBE over a four-year period and scrap government requirements that gasoline contain 2 percent oxygen to reduce air pollution.

The measure was approved by the Environment and Public Works Committee by a 11-10 vote.

The ethanol provision, a boon to farmers, is part of a package of fuel proposals that won wide Senate support last year, only to have the energy legislation die in the final weeks of the congressional session.

It would require that at least 5 billion gallons of ethanol be use as a gasoline additive by 2012, or about twice as much as the ethanol industry says it is producing currently.

Murkowski said the committee language included an exemption from the ethanol requirements for Alaska and Hawaii.

In many areas the ethanol would replace MTBE, which helps reduce air pollution from automobile tailpipes, but also has been found to be a problem when it gets into lakes, streams and drinking water supplies. Use of the additive in Alaska was suspended several years ago after Fairbanks residents complained that it was making them ill.

Another part of the package would lift the requirement that gasoline in many parts of the country contain a 2 percent oxygen content to reduce air pollution. Refiners have said they can meet air quality requirements without the oxygenate by how they blend gasoline. Both ethanol and MTBE are oxygenates that have been used to meet the requirement.

Energy legislation being considered Thursday by the House also calls for the increased use of ethanol, which has widespread political support among both Republicans and Democrats and within the Bush administration.

But the House version does not ban MTBE, although it does not interfere in states doing so.

Separately, the Senate energy panel also agreed to a series of measures aimed at promoting oil and gas development, including provisions that would allow companies to forgo payment of federal royalties from gas taken from very deep wells. Supporters of the measure said it will get companies to develop deep reserves they now do not pursue.

The legislation also calls for the government to make a new inventory of oil and gas resources in the waters of the Outer Continental Shelf, including vast areas that are currently off limits to development. Murkowski said an amendment would also increase the amount of royalties from such development shared with coastal states.

Democratic Sens. Bob Graham of Florida and Dianne Feinstein or California called the study unnecessary and said it is aimed at increasing the political pressure to lift the drilling moratoria in effect since 1982.

''It's nothing more than a study,'' said Sen. Pete Domenici, R-N.M., ''Wouldn't we not want to know what (resources) we've got.''